High tech success Carmanah Technologies Corp. has bought a second Victoria solar-power firm in a union the Harbour Road-based company hopes will help solidify its globe market.
Twelve-year-old Carmanah is buying 20-year-old Soltek Powersource Ltd. for $10 million, with the promise of another $2 million if Solteck can raise its six-month revenues to $9 million.
Last year Soltek reported revenues of $17.5 million and profits of $1.2 million. With 65 employees, it has been profitable from birth, providing solar power for a variety of users.
Carmanah made $466,000 in profits off sales of $15.9 million worth of solar-powered LED lighting, a tiny return, CEO Art Aylesworth cheerfully admits. "We've been concentrating on expanding our markets and developing products. Now we are ready to make profits."
Linking with Soltek is sure to help, Aylesworth is certain. The two firms are a good fit. Carmanah is the world leader, he says, in providing solar-powered lighting, using LED technology of wattages from 0.5 to 200. The smaller light might illuminate a marine buoy, the larger, a bus shelter.
Carmanah's customers include the coast guards of Canada, the U.S. and Great Britain as well as the U.S. army, navy and air force. More than 90 per cent of its customers are outside of Canada.
Soltek supplies 60 per cent of the Canadian market with solar power devices to heat and light cottages as well as remote high tech installations of navigational gear.
Its power supplies range from 50 watts to 10,000 watts.
The deal came about when Soltek founder David Egles met Aylesworth at a Vancouver Island Advanced Technology Centre Christmas party and asked for advice on taking his private firm public to expand into the U.S. and world markets like Carmanah had done.
The takeover emerged as an alternative way to grow the firm, which has 65 employees to Carmanah's 120.
Aylesworth identifies several factors contributing to the growth of solar powered products. Recent power failures have demonstrated the unreliability of conventional power while its cost has risen. Meanwhile the industry has driven down the costs of solar power, with Carmanah playing a key-role with regard to lighting.
"If we are not cheaper in terms of installation costs than other lighting, we certainly hope to be cheaper once maintenance costs and power costs are considered."
Aylesworth said Carmanah would bring the same drive for efficiency to Soltek, which offers tailor-made solar engines for different users. Carmanah plans to offer off-the-shelf solar engines.
"We'll ask you what power you need and what latitude you are in and give you the system you need," Aylesworth said.
As well, the two companies will be able to sell each others' products to existing customers while Carmanah helps Soltek expand to the U.S.